Big tech firms were previously seen as the saving grace of office landlords. Now, they’re another group of tenants retreating from the market.
Some of the sector’s biggest names have been shedding office space across the country, subletting unwanted floors and pausing construction on developments they spearheaded, the Wall Street Journal reported. The much-feared culprit of work-from-home policies has been replaced with another frightening omen: downsizing.
Amazon is reportedly planning to lay off 10,000 employees layoffs as early as this week, after Meta and Twitter recently cut large chunks of their workforces.
Big tech firms are looking to sublet a crushing 30 million square feet across the country, up from 9.5 million square feet in the fourth quarter of 2019, according to CBRE. The ballooning figure is roughly 14 percent of the sublease space available on the overall market, which CoStar casts at a record 212 million square feet.
In terms of subletting, big tech firms appear to be ready to bail on a cumulative 6 percent of their space. Across 30 North American markets, CBRE data show these firms account for 500 million square feet of office space.
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Big tech’s retreat from offices represents a stunning contrast for the sector that drove the market less than a year ago. Tech companies bet on the future of offices, ramping up leasing activity as other sectors grappled with the future of work. The tech sector accounted for 20.5 percent of leasing activity last year, according to CBRE.
Even before cuts hit tens of thousands of workers in the industry, some of the biggest firms made headlines for powering down from on leasing. Rideshare company Lyft was reported in August as looking to cut its office load in half, subletting 615,000 square feet across four markets. Social media giant Meta bailed on plans to occupy 589,000 square feet in Austin, planning to sublease the space instead. Meta and Amazon in July were reported to be backing away from plans to expand presences in New York City.
Google emerged as one big tech hope for office landlords last year, when the company set a pandemic-era benchmark by paying $2.1 billion to buy St. John’s Terminal in Manhattan’s Hudson Square.
— Holden Walter-Warner